How Are Domestic Markets Reacting After the Inflation Data?
Following the announcement of the November inflation data by the Turkish Statistical Institute (TÜİK), activity in the domestic markets increased. Borsa Istanbul turned upwards while the foreign exchange market maintained a slightly positive outlook.
The BIST 100 index began to react positively to the November inflation data after a positive opening. In the Central Bank of the Republic of Turkey (CBRT) November Market Participants Survey, the expectation for the Consumer Price Index (CPI) increase was indicated as 2.01%. However, the reported data showed that the monthly inflation increase was 2.24%, exceeding expectations. This resulted in an annual inflation rate of 47.09%.
The November inflation data is expected to have a significant impact on the interest rate decision that the CBRT will make on December 26. As the markets have been focusing on inflation data in recent days, there was a prevailing thought that monthly inflation, which could come in below expectations, might increase positive trends in the stock market. However, despite inflation coming in above expectations and the annual inflation not decreasing as anticipated, the market continued its positive movement.
Expectations for a rate cut from the CBRT persist. Among the sectors contributing to Borsa Istanbul's positive trend during the morning session, banks rose around 3% and the real estate sector increased around 2%. This trend indicates that the markets continue to maintain expectations for a rate cut from the CBRT this month. Currently, two sectors experiencing partial declines in the BIST are sports and small to medium-sized enterprises (SMEs). The BIST 30 shares have seen an average increase of around 2%, being more sought after, while the rise in the index excluding the BIST 100 remained more limited at below 1% in the early trades.
In the domestic foreign exchange market, the USD/TRY maintained its upward momentum after the inflation data, moving at the level of 34.74 with a 0.1% increase. The EUR/TRY is trading in a similar fashion around 36.5. Gold in grams is at 2,955 TRY, reflecting an increase of nearly half a point.
In the bond market, 2-year bonds rose by 1.37% to 41.36%, while 10-year bonds increased by nearly 1% to 29.48%.